On Monday, I wrote about a possible GBPUSD breakdown. The pair went on to close below the 1.3460 handle and even form a bearish pin bar during yesterday’s session. And just a few moments ago, the GBPUSD hit our target at 1.3300. See Monday’s post for more.
Another pair that could continue to suffer from pound weakness is the GBPNZD. It’s in the process of testing rising wedge support that extends from the current 2018 low at 1.8616.
At the moment, that wedge support comes in at 1.9300. You can see how the area has attracted a bid over the last 48 hours.
One observation that gives credence to a bearish scenario (apart from the rising wedge) is how the recent swing high in May failed to retest resistance at 1.9840. While there are no guarantees, that’s an indication that bids are drying up.
It’s going to take a daily close at 5 pm EST (using a New York close chart) below the 1.9300 area to expose downside targets. The first of those involves 1.9220. You can see from the chart below how this area has served as a pivot for the pair since late last year.
A daily close below that would expose the 1.8900 area. There are several lows from February and March near 1.8900 as well as highs in April and May of 2017.
If we get a close below wedge support, which appears likely, we could see the GBPNZD slide 700 pips. That may sound too good to be true, but rising wedges such as this tend to target the inception point, which in this case is the current 2018 low at 1.8616.
Keep in mind that the BOE’S Carney has several speeches scheduled in the final 48 hours of the week. Some will affect the pound more than others, but it would be good to know when they’re scheduled regardless. See the event calendar for details.